Uniq, the embattled convenience food group, believes that it will experience a recovery next year, despite today reporting what its CEO called “ highly unsatisfactory” full year trading.
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At the group level, operating profit fell to GBP13.5m, from GBP28.3m in 2004/5, on revenues of GBP825.1m, down 6% on the prior year.
The company said it took some comfort from the early impact of its recovery plans, reflected in the improved performance between the first and second halves of the year. Operating profit was down only GBP1.9m in the second half compared with a decline of GBP12m in the first half.
The 52% fall in operating profit together with a higher interest expense meant that pre-tax profits before significant items fell by 80% to GBP4.6m. The adjusted loss per share was 0.2 pence.
Chief executive, Geoff Eaton said: “The results for the year as a whole were unsatisfactory but I was encouraged by the improvement in the second half. We now have a great team who can build on this start and help unlock the potential at Uniq.
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By GlobalData“The highly unsatisfactory trading performance for the financial year to March 2006 clearly demonstrates why some tough decisions and decisive actions were needed in changing the executive team and realigning organisational structures. Uniq has a strong portfolio of businesses. We have, however, paid the price of not keeping in close enough touch with a number of our key customers and failing to move at the pace that is required to succeed in the dynamic but challenging convenience food market.”
The Southern Europe division had another successful year while the results from both the UK and Northern Europe were sharply down.
In Southern Europe the operating profit of GBP25.2m was a small improvement on the prior year performance despite very tough conditions in the frozen convenience foods market.
But the UK business incurred operating losses of GBP11.6m (prior year GBP5.5m loss) due to an operating loss of GBP11.9m at the Minsterley desserts plant. The company said this reflects some serious shortcomings in handling this acquisition which date back to May 2004.
In Northern Europe, performance reached break-even, versus an operating profit of GBP9.0m in the prior year.
“Although the competitive situation was tougher across all our markets last year and cost inflation created a new challenge, a large part of the deterioration in financial performance has reflected our own shortcomings and we have taken rapid action to recover the position,” a statement said.
As part of its strategy going forward, the company said it would focus on a smaller number of convenience foods businesses. Consequently, it has decided to explore the sale of its French spreads and Belgian salad businesses.
Looking forward, the statement said the board believes the improving trend in performance that was achieved in the second half of last year should continue into the current financial year.
“We expect a significant recovery in UK performance this year, sourced from underlying market growth, cost reductions, efficiency improvements at Minsterley and the price increases secured at the end of the last financial year,” said Uniq’s chairman Nigel Stapleton.
“The changes made in Northern Europe are more recent and any improvement in performance versus last year is likely to be modest and evident only in the second half. In Southern Europe it will be a challenging year as we manage a significant change programme and develop plans to secure the future growth of a stand-alone convenience foods business including a significant increase in media and marketing expenditure.
“Overall the board is confident that the significant and far reaching changes that have been made across the business will, during the next year, start to demonstrate the true potential of Uniq.”
